Is it Personal Property or is it Real Property?
What is personal property? This is not an academic question. When a seller and a buyer don’t agree, the problem is real. The buyer expected the huge freezer in the garage to stay, but now it is gone. People have sued each other for less.
What must stay in the home? The listing agent should address this question with the seller before drafting the listing agreement. May I take that dining room chandelier with me? It is a family heirloom. Can I sell the riding lawn mower separately to the buyer? It is brand new.
What will stay in the home? The buyer’s agent should educate the buyer about personal property long before touring the first home. If you are the buyer and see curtains you really like make sure they are included in the sale of the home. If you want that standby generator, ask if it stays or if it is for sale separately.
Only the written contract counts.
Both sides in the transaction have expectations. There are tools to manage these expectations. One is the listing; the other is the contract, known as the purchase and sale agreement. The published listing usually lists the appliances that are part of the sale. The range/oven, the dishwasher, the refrigerator, the microwave, and the washer and dryer may be included. A buyer, however, should never rely on the listing. What counts is the purchase and sale agreement, addenda, and contingencies.
The Purchase and Sale Agreement defines fixtures
The Residential Real Estate Purchase and Sale Agreement defines on page two, point C, all items that are considered fixtures (shown below as a list) and on page one, paragraph five, it provides check boxes and write-in space for what appliances are included in the sale. The purpose of the latter is to define certain appliances as fixtures even if they could be moved.
Fixtures listed in Purchase and Sale Agreement:
- built-in appliances
- wall-to-wall carpeting
- curtains, drapes and all other window treatments
- window and door screens
- storm doors and windows
- installed television antennas
- ventilating, air conditioning and heating fixtures
- trash compactor
- fireplace doors
- gas logs and gas log lighters
- irrigation fixtures
- electric garage door openers and remotes
- water heaters
- installed electrical fixtures
- lighting fixtures
- shrubs, plants, and trees planted in the ground
- all bathroom and other fixtures
- all associated operating equipment
The fixtures listed above are expected to be sold with the home as real property. The value of these fixtures is included in the price of the home and, if the home is financed with a loan, these fixtures are part of the lender’s security interest. If any of the above items are leased, such as the water heater, the seller must disclose it.
With new technology, we have acquired new fixtures; for example, the articulating flat-screen TV mount in the living room. What about that built-in, enterprise-grade wireless router? The above list of fixtures is certain to grow.
Chattel and cattle are personal property.
Fixtures are “affixed” to interior walls or exterior grounds. In contrast, personal property is “movable” such as a dining room table or a lawn mower. The movable items are also referred to as “chattel” – a word derived from French via Latin. It is the source of the English word cattle. All livestock is considered personal property because it moves or can be moved. The sale of personal property is a separate transaction between seller and buyer without any involvement of the real estate agents.
The contract trumps the listing.
To avoid any misunderstandings, the seller should label all fixtures that will not stay in the home or on the grounds. More importantly, the seller should provide a list of all excluded fixtures as an addendum to the Purchase and Sale Agreement. Before writing an offer, the buyer’s agent should point out what appliances are included and which ones are not.
When it gets tricky.
The buyer wants the washer and dryer and has included them in the offer. Neither appliance was listed in the listing because the sellers wanted to take them to their next home. If the seller overlooks that the buyer has checked washer/dryer on page one of the Purchase and Sale Agreement, both appliances must stay with the sale of the home. But what if the seller had marked the washer and dryer with a sign “washer and dryer are not staying with the home?” What if the seller complies with the letter of the contract and leaves the buyer with a much older, used washer and dryer?
Specify what you are not buying.
The standard Optional Clause of the Purchase and Sale agreement says that “any personal property, fixtures or other items remaining on the property when possession is transferred to the buyer shall thereupon become the property of the buyer and may be retained or disposed of as buyer determines. However, the seller shall clean the interiors of any structures and remove all trash, debris, and rubbish on the property prior to buyer taking possession.” In other words, a buyer should also specify in writing the items the seller must remove prior to closing. As the buyer, you do not want to inherit those large drums in the backyard.
Above all: keep the perspective
Details matter and nobody likes an unpleasant surprise. Still, both buyer and seller should focus on the big picture. It simply may not be worth arguing over a $500 appliance when the price of the property is at least a thousand times more. When all else fails, an experienced real estate agent will step up to the plate.
First published by Gerhard as his
February 2017 View from the Street Newsletter.